Cracks grow in China as exports fall

CHINESE exports plummeted by their fastest rate in a decade last month as the global recession deepened.

PUBLISHED: 00:00, Wed, Jan 14, 2009

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The global recession has hit China hard, where exports have plummeted

And economists warned they were likely to fall further and faster in the face of collapsing demand from Europe and the United States, piling the pressure on the Chinese government to do more to maintain growth.

Beijing has already cut interest rates five times and announced a £400billion bail-out package to keep growth running at a level sufficient to absorb the millions of young Chinese entering the workforce each year.

The 2.8 per cent drop in exports was small compared to other Far East countries. But economists said huge falls in exports from Taiwan and South Korea meant there was worse to come.

HSBC’s Ma Xiaoping said she expected Chinese exports to plunge by 20 per cent this year.

“The real economy is facing serious challenges right now, said another economist. “China has to boost exports to reduce unemployment and social unrest.”

But others disagreed, stating the fall would not get too bad. Merrill Lynch’s Ting Lu said China made a lot of very cheap, basic goods, ideal for a world seeking bargains.

“China’s exports are the sort of goods people need to consume,” he said.